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#1955729 - 08/21/14 04:11 PM Exemption a customer for cash withdrawals for tips
needtoknowplease Offline
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Joined: Jun 2012
Posts: 11
I am having a hard time determining if this would be considered a "Payroll Customer". We have a branch who are asking for one of their customers be considered for CTR Exemption. They operate a restaurant and withdraw cash on a monthly basis to "tip out" their employees.

Would you consider their "tipping out" as a sort of payroll and include them in this category for Phase II exemption?

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#1955911 - 08/21/14 09:25 PM Re: Exemption a customer for cash withdrawals for tips needtoknowplease
Sunshine Lady Offline
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Sunshine Lady
Joined: Apr 2014
Posts: 673
A ‘‘payroll
customer’’ is any other person (i.e., a
person not otherwise covered under the
exempt person definitions) that: (A) Has
maintained a transaction account at the
bank for at least two months; (B)
operates a firm that regularly withdraws
more than $10,000 in order to pay its
United States employees in currency;
and (C) is incorporated or organized
under the laws of the United States or
a State, or is registered as and eligible
to do business within the United States
or a State.17 A payroll customer is an
exempt person ‘‘[w]ith respect solely to
withdrawals for payroll purposes"- Tips do not sound like payroll to me. I found this in a FinCen Release from 2009 about Payroll exemptions.
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#1955917 - 08/21/14 09:37 PM Re: Exemption a customer for cash withdrawals for tips needtoknowplease
Doug Hendrickson Offline
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Doug Hendrickson
Joined: Oct 2009
Posts: 3,927
The thing that I would question is: are these reported on the W-2 by the employer (as tips). If so, I would argue that they constitute part of the payroll package and the customer could be deemed a 'payroll customer'.

I'm not sure about this particular situation, but I have heard of companies where the employee's "wage" is a combination of tips, with the employer adding to them if they were not sufficient to meet either the minimum wage or some contracted amount.
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#1955927 - 08/21/14 09:47 PM Re: Exemption a customer for cash withdrawals for tips needtoknowplease
kw004h Offline
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Joined: Nov 2009
Posts: 219
Chicagoland, IL
Does it seem a bit strange that cash to "tip out" would only be needed once a month? I used to enjoy taking my cash tips home every night when I worked in food service. For those times when the tip was left via credit card, my employer paid us from the register at the end of each night - not once a month. I wonder if practices have changed, or if that was just what my employer did?

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#1955947 - 08/21/14 11:39 PM Re: Exemption a customer for cash withdrawals for tips needtoknowplease
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Sounds like they are paying the tips back under the table. I would be vetting this customer very carefully.
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#1955952 - 08/22/14 01:27 AM Re: Exemption a customer for cash withdrawals for tips needtoknowplease
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
I'm curious about what they're doing, too curious to even consider them for exemption...
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#1956073 - 08/22/14 02:28 PM Re: Exemption a customer for cash withdrawals for tips needtoknowplease
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
A once monthly CTR is not too great a burden to bear in this situation, in my humble opinion. This explanation is just too strange (as in foreign to my experience) to make me comfortable.
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